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- 21 November 2008
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To stimulate some discussion : round numbers can, at times, provide resistance or support (I know there will be people who want to argue with this statement). Humans like round numbers, e.g. 4000, 4200 etc. Because of this they may provide support or resistance of a price.
CFD indicies, obviously they are based on the underlying market, but they are no exactly the same (their price will vary depending on the provider). So lets assume a technical pattern forms in the price of an AUS200 index CFD. Based on measuring techniques it should run for 50pts. There are no obvious support or resistance levels, in the near term, that will interrupt the progress of the price. The same pattern has formed on the SPI, however in this case the measure of the chart pattern is interrupted by the 4000 level.
My question/thoughts: A barrier such as this may provide resistance not seen on a CFD chart, so traders of a CFD index are lacking some valuable information when they open and close trades.
Do you agree?
CFD indicies, obviously they are based on the underlying market, but they are no exactly the same (their price will vary depending on the provider). So lets assume a technical pattern forms in the price of an AUS200 index CFD. Based on measuring techniques it should run for 50pts. There are no obvious support or resistance levels, in the near term, that will interrupt the progress of the price. The same pattern has formed on the SPI, however in this case the measure of the chart pattern is interrupted by the 4000 level.
My question/thoughts: A barrier such as this may provide resistance not seen on a CFD chart, so traders of a CFD index are lacking some valuable information when they open and close trades.
Do you agree?
